Government urged to dismantle ESB
The Competition Authority wants to see the ESB divided into separate, independent supply companies competing against each other to supply cheaper power.
In a submission to Natural Resources Minister Noel Dempsey, the watchdog said the ESB had no incentive to lower electricity bills, which are 46% higher than those paid by householders in Britain.
“The current structure of Ireland’s electricity market has contributed to high prices and poor reliability of supply,” the report said.
“The ESB has no incentive to lower prices when its own costs are falling yet it can pass on any rise in costs without fear of a competitive response [from a commercial rival].
“This system, if allowed to persist, will cost consumers and industry more dearly in the future as supply fails to keep up with demand.”
The ESB was inefficient and saddled the economy with €100m in extra costs every year while maintaining a stranglehold on prices paid by consumers, the authority said.
In January, average household bills are going up 19.4% to €900 a year compared to €713 consumers pay in the North and €585 paid in Britain.
Big business is facing a 21% rise in ESB costs while small and medium firms will see their bills go up by 19.6%.
“As an export-oriented economy Ireland cannot afford to allow increased prices to continue to erode its competitiveness.
“Key sectors of the economy like pharmaceuticals and information technology rely heavily on reliable, secure and competitively priced electricity,” the dossier added.
The authority also called for the ESB to be stripped of ownership of the electricity grid, which is the network of overhead lines and underground cables supplying power to homes and businesses.
The authority said its proposals would encourage new firms to build more efficient power stations while the ESB companies would have to cut costs, resulting in lower bills.
The authority’s submission to Mr Dempsey has come in response to the Government’s green paper on energy policy for the future.
Earlier this week the Government’s gas and electricity regulator, which sets the price of bills, announced the ESB was selling off 30% of its generators to rivals.
But the Competition Authority said the measure would still leave the ESB as a dominant market player and enable the company effectively to dictate the cost of bills.
The authority also wants to see the Government ensure that the proposed all-island electricity market fosters competition to drive down bills.
